Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the Vice President for Branches and Campuses
Santa maria bulacan campus
Santa Maria, Bulacan

Name: De Leon, Misha Laine B.

Section: BSA 2-1
Date and Time of Submission: November 29, 2021 (9:00 PM)

CONCEPTUAL FRAMEWORKS AND ACCOUNTING STANDARDS

ANSWERS TO LESSON MODULES
04 LESSON PAS 1: PRESENTATION OF FINANCIAL STATEMENT (PART 2

RESEARCH ANALYSIS
1. What is the purpose of the notes to financial statements?
Notes to the financial statements disclose the detailed assumptions made by
accountants when preparing a company's: income statement, balance sheet, statement of
changes of financial position or statement of retained earnings. The notes are essential to
fully understanding these documents. However, the first four components of financial
statements are insufficient to provide their readers with the clarity required to make financial
and economic decisions. As a result, the notes to financial statements must accompany the
information presented on the face of the financial statements. For instance, if you want to
know the breakdown and movement analysis of the property, plant, and equipment shown
on the balance sheet's face,you refer to the note that is cross-referenced to such asset.

2. What are the components of comprehensive income?

Comprehensive income must contain profit or loss, total other comprehensive income,
comprehensive income for the period, and lastly an allocation of profit or loss and
comprehensive income for the period between non-controlling interests and owners of the
parent.[IAS 1.81A]
 3. What are the two forms of presenting the income statements?
An entity has a choice of presenting: a single statement of profit or loss and other
comprehensive income, with profit or loss and other comprehensive income presented in two
sections, or two statements: a separate statement of profit or loss a statement of
comprehensive income, immediately following the statement of profit or loss and beginning
with profit or loss [IAS 1.10A]

4. What are the components of the statement of changes in equity?

The components of the statement of changes and equity must contain, the total
comprehensive income for the period, showing separately amounts attributable to owners of
the parent and to non-controlling interests, the effects of any retrospective application of
accounting policies or restatements made in accordance with IAS 8, separately for each
component of other comprehensive income and lastly the reconciliations between the
carrying amounts at the beginning and the end of the period for each component of equity,
separately disclosing: profit or loss, other comprehensive income transactions with owners,
showing separately contributions by and distributions to owners and changes in ownership
interests in subsidiaries that do not result in a loss of control.

ASSIGNMENT

Research one (1) Audited Financial Statements of the following companies and analyze what
items in the Statement of Comprehensive Income made them profitable.

SM Investments Corporation

SM Investments Corporation is well known throughout the country for its prestigious
malls, and it has been a part of our growing economy and history. According to their 2018-2019
financial reports, their net income growth has been exponential throughout the year; as of
December 2019, they earned P354.1 billion from merchandise sales and P44.5 billion from real
estate sales. Their net income increased from 5.51 percent to 12.62 percent, which is more
than half of their previous year's net income; thus, it is reasonable to conclude that SM
Investments Corporation's primary source of profit is the merchandise sold in their various
department stores.
FORMATIVE ASSESSMENT

1. A 6. B
2. B 7. D
3. B 8. B
4. B 9. B
5. C 10. B

LEARNING ASSESSMENT

1. C 6. D
2. C 7. D
3. C 8. C
4. B 9. A
5. D 10. B

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